OPINION | Balancing India's AI Ambitions: CCI's approach to competition and innovation

But AI integration is not a classic tying case where two separate products are tied together, and differs in both purpose and effect. While some AI tools exist as standalone products, much of their value is realised through cross-functional use. From search engines, to healthcare diagnostics, and telecom services, AI is increasingly being woven into the fabric of everyday tools and services, enhancing core functionality.

The evolution of phone cameras offers a useful analogy. Adding a camera to a phone might have once raised bundling questions. Today, consumers expect seamless integration, with all phones now having cameras. AI enhances this further by powering sharper images and optimisation that hardware alone cannot deliver. Similarly, embedding AI into office software reflects user preference for integrated, more capable tool.

AI integration doesn’t just add features; it can intensify competition by making products more distinctive. The market remains dynamic, with new players like DeepSeek, Anthropic, Cohere and Mistral scaling quickly. This shows incumbents embedding AI don’t foreclose rivals, rather, they keep competition alive, giving consumers more choice.

The Government’s approach to AI 

The Government has recognised AI’s importance, launching the Rs 10,300 crore IndiaAI Mission and supporting start-ups and infrastructure. To encourage innovation in such a dynamic and evolving field, India has consciously avoided blanket regulation and instead, sectoral regulators like the ICMR in healthcare and the RBI in fintech have issued guidance. This light-touch approach gives AI room to grow, while keeping open the option of intervention if specific risks emerge.

How the CCI has approached tech integration 

The CCI has been an active voice in this debate. The Chairperson, Ravneet Kaur, has repeatedly stressed the value of voluntary codes of conduct over coercive action and highlighted that traditional adversarial models of enforcement may not be suited to evolving markets. CCI’s AI market study, too, recommends that businesses adopt a self-audit framework to proactively detect and mitigate competition risks, rather than inviting premature enforcement, and gives guidelines on how to implement this.

The Commission’s past decisions are equally instructive. In 2020, it found that integrating Google Meet with Gmail was not coercive and enhanced user experience. In reviewing WhatsApp Pay, it noted that users could freely adopt or ignore the feature, with rival apps still available. Most recently, in its March 2025 decision involving Microsoft’s pre-installed Defender antivirus software, the CCI dismissed a complaint alleging abusive bundling. It found no restriction on consumer choice or competition, noting that users can install third-party solutions and established rivals remain active in the market.

The CCI has shown similar restraint in nascent markets: in 2019, when examining OYO in budget hotel franchising, it found that while OYO was significant, the market was still evolving and dominance could not be unambiguously concluded.  Together, these cases highlight a core principle: competition law is guided by consumer benefit, and integration that expands functionality without limiting choice meets that test. This is also why probes launched without a clear theory of harm risk creating uncertainty.

Smart guardrails, not heavy hands

As India shapes its AI future, competition oversight must balance two goals: consumer welfare and safeguarding innovation. The CCI’s AI market study finds that AI adoption has enhanced consumer welfare by improving service quality, personalisation, and access, and by expanding consumer choice through new and customised offerings The risk of regulating too early is that consumers end up paying more, while innovation slows, derailing India’s AI growth story.

Heavy compliance costs, whether for legal reviews, audits, or product redesigns, seldom stay with companies; they trickle down to users. In a price-sensitive market like India, even small increases matter. Affordable options have helped drive adoption so far, from OpenAI’s discounted monthly plan to Airtel’s tie-up with Perplexity.ai that gives millions of users premium access worth nearly INR 17,000 annually. Heavy-handed rules could put such models at risk.

The impact would not stop with big technological companies - it’s not just the big players at stake. Startups and small businesses often plug into the infrastructure of larger providers for APIs, compute and distribution. The CCI’s AI market study also notes that Indian startups are now integral to different layers of India’s AI stack, from data services (like Extracto, ML Labs, and iMerit) to model development and generative AI (such as Sarvam AI and Krutrim). Over-regulation in such a dynamic, interdependent ecosystem could disrupt this layered growth and limit India’s ability to scale its own AI capabilities.

What markets need most is predictability. The CCI can provide it by offering practical guidance on how competition law will apply to AI integrations and emerging business models. With the industry still in its early stages, guidance, like the CCI’s combination FAQs, would give firms clarity on compliance and self-governance, rather than leaving them to learn through enforcement. Other jurisdictions, like Singapore, are already doing so.

Ultimately, India’s AI ambition will depend less on sweeping probes and more on smart, measured guardrails that protect consumers while letting innovation thrive.

(Pranav Mody, Competition Counsel, and Chikita Shukla, Associate at Ikigai Law.)

Views are personal, and do not represent the stance of this publication.